MUMBAI POSTAL EMPLOYEES CO-OP. CREDIT SOC. LTD.,MUMBAI vs. PR. CIT -17, MUMBAI

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ITA 682/MUM/2021Status: DisposedITAT Mumbai14 September 2021AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessment order lacked material discussion on the factual matrix and eligibility for deduction. It restored the matter to the Pr. CIT for reconsideration, granting the assessee an opportunity to substantiate its claims.

What were the facts?

The assessee, a cooperative credit society, claimed deduction under Section 80P. The Pr. Commissioner invoked revisional jurisdiction under Section 263, finding the assessment order erroneous and prejudicial to revenue due to lack of inquiry regarding taxability of interest and dividend income.

What were the issues?

Whether the assessment order was erroneous and prejudicial to the interest of revenue, warranting revision under Section 263, and the eligibility of the assessee for deduction under Section 80P.

Which sections of the Income-tax Act were involved?

Section 80P,Section 263,Section 143(3)

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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

For Appellant: Shri Deepak Tikkekar, Ld. AR
For Respondent: Shri Sunil Jha, Ld. CIT-DR

Heard together (2 matters)

I.T.A. No.682/Mum/2021
I.T.A. No.681/Mum/2021

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1.1 Aggrieved by invocation of revisional jurisdiction u/s 263 for Assessment Years (AY) 2015-16 & 2016-17 by learned Pr. Commissioner of Income Tax-17, Mumbai (Pr. CIT) vide separate orders dated 22/01/2021 & 09/03/2021, the assessee is in further appeal before us.

1.

1.2 The Registry has noted a delay of 38 days in appeal for AY 2015- 16, the condonation of which has been sought by the assessee on the strength of affidavit of Shri Mahesh Dhondiraj, Secretary of the assessee. In the affidavit, it has been stated that the hearing notices as well as the impugned order were accessed by employees in the office but were not brought to the notice of concerned officials. The Ld. CIT- DR, on the other hand, pointed out that the assessee did not appear during revisional proceedings. 1.3 After going through the contents of the affidavit, the bench formed an opinion that the delay deserve to the condoned and the assessee be provided another opportunity of hearing. Accordingly, the appeal is admitted and adjudicated as given in succeeding paragraphs.

2.

The assessee being a cooperative credit society was assessed for AY 2015-16 u/s 143(3) on 28/04/2017. The assessee claimed deduction u/s 80P(2)(a)(i) which was allowed in the assessment order.

3.

However, the order was subjected to revision u/s 263 vide order dated 22/01/2021. It was noted that the assessee claimed deduction u/s 80P(2) on interest and dividend receipts. The interest of Rs.74.50 Lacs was taxable income. However, Ld. AO did not make any enquiry as to issue of taxability of interest income and therefore, the order was erroneous and prejudicial to the interest of the revenue. Accordingly, a show-cause notice was issued on 16/03/2020 and 28/12/2020, however, none appeared for assessee and no submissions were filed. Accordingly, an opinion was formed that the assessee was ineligible to claim deduction in view of amended provisions of Sec.80P(4), The failure on the part of Ld. AO make necessary enquiries and bring on record all necessary facts for determining the true character and nature of interest income especially in the light of amended provisions of Sec.80P(2)(4) has made the order amenable to revisions u/s 263. Accordingly, the order was set aside with a direction to Ld. AO to frame de novo assessment. Aggrieved, the assessee is in further appeal before us.

4.

The Ld. AR submitted that the assessee earned interest of Rs.107.52 Lacs on fixed deposits held with MDCC Cooperative Bank and dividend income of Rs.17.61 Lacs on shares held with the same entity. The Ld. AR submitted that since entire investment was in Co- operative Banks, both these components were eligible for deduction u/s 80P(2)(d). Reliance has been placed on various decisions of the Tribunal to support the same. The Ld. AR also submitted that the assessee claimed deduction u/s 80P(2)(a)(i) on entire net profit based on the decision of Hon’ble Bombay High Court in the case of The Quepem Urban Co-operative Credit Society Ltd. vs. Asst. CIT (2015) 377 ITR 272 and various other decisions as enumerated in the written submissions. The Ld. AR also submitted that Ld.AO, having taken possible view based on various judgments, his order cannot be said to be erroneous and prejudicial to the interests of revenue. The Ld. CIT- DR, on the other hand, submitted that all these arguments are being put forth by the assessee for the first time.

5.

Upon careful consideration of assessment order, revisional order and the submissions made by both the parties, we find that there is no material discussion in the assessment order regarding factual matrix as well as assessee’s eligibility to claim deduction u/s 80P. The assessee failed to appear during revisional proceedings and could not substantiate the same. All these arguments as put forth by Ld. AR were not considered by Ld. Pr.CIT while setting aside the assessment order.

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